January 24, 2005
CONTACT:
Chris Goetcheus
(617) 973-8767

Massachusetts Residents Encouraged To "Get Smart" About Insurance Policies

 

The National Association of Insurance Commissioners ("NAIC") and the Massachusetts Division of Insurance are teaming up this week to encourage insurance consumers to get smart about their policies and coverage during the fourth-annual Get Smart About Insurance Week, January 24-28, 2005.

Massachusetts consumers are urged to call the toll-free Get Smart Hotline at 1-866-SMARTWEEK or visit http://www.naic.org/index.htm to obtain free information about what they should expect from insurance coverage as well as tips for confirming whether a policy is legitimate before they buy.

"Sound information is the key to avoiding insurance coverage problems and scams. Policyholders should stay current with their policies, especially when insurance constitutes such a large portion of most household budgets," said Massachusetts Insurance Commissioner Julie M. Bowler. "Too often people buy an insurance policy and don't take the time annually to reassess whether their policies reflect changes in their households and lives," Bowler added.

The General Accounting Office ("GAO") verifies that being in the dark about insurance can be very costly to consumers. A recent GAO report showed that 144 fake health insurers sold bogus policies that affected more than 200,000 policyholders between 2000 and 2002, resulting in $252 million in unpaid claims. Recent studies by the NAIC show that a majority of Americans do not know enough about their own policies. No more than 33 percent of those polled each year since 2001 could say they understood the details of their insurance policies "very well."

Fight Fake Insurance

Fake insurance is coverage offered with the intention of defrauding consumers or businesses. It can be enticing because it's typically less expensive than legitimate policies offered by licensed insurers. Two of the more common forms of fake insurance are discount healthcare memberships and unlicensed health plans. Neither are usually backed by a licensed insurer, and therefore, not approved by any state insurance regulator. Discount healthcare membership offers typically never mention the words "insurance" or "premium" in advertisements. Instead, they promote a list of physicians and access to limited discounts for services, treatments or prescription drugs in return for a monthly membership fee.

In the case of unlicensed health plans, claims may be paid at the outset to gain plan member confidence, but excuses for delayed claim payments eventually result and typically payments cease altogether, often while premium continues to be collected. Self-employed individuals and members of professional associations have been especially susceptible to offers from unlicensed health plans in recent years.

"These products and consumers who purchase them are not protected by state insurance laws. It's extremely important for consumers to Stop, Call, and Confirm with the Division of Insurance before buying any policy," added Commissioner Bowler.

More "Get Smart" Tips for Consumers

  • Call the Massachusetts Division of Insurance at (617) 521-7794 or visit the website at www.state.ma.us/doi for consumer guides and up-to-date information prior to purchasing health, life, auto, home or other insurance coverage.
  • Schedule a routine "check-up" with your agents or insurers at least once a year to ensure that you have adequate coverage for all policies.
  • Inquire about the cost benefit of opting for higher deductibles.
  • Ask specifically about available discounts.
  • Where competitive rating is permitted, shop around among insurers for the coverage you need at the best price.
  • Remember an insurance policy is a legal document. Read it carefully.

About the NAIC

Headquartered in Kansas City, Mo., the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia, and four U.S. territories. The association's overriding objective is to protect consumers and help maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct, and economic expertise. Formed in 1871, it is the oldest association of state officials. For more information, visit NAIC on the Web at www.naic.org. For more information about Get Smart About Insurance Week, consumers are urged to call the Get Smart Hotline toll-free at 1-866-SMARTWEEK (1-866-762-7893) or visit www.naic.org/ to request a free brochure, get information on what they need and should expect from insurance coverage, and find out how to contact their state's insurance department.